A study on the effectiveness of advertising, on sales of insurance products in Malta

Abstract

Advertising is a means of communication, by which organisations attempt to interpret the attributes of products and services, in respect of the needs and wants of consumers. Different organisations have different objectives of advertising, ranging from improving the company’s image and its goodwill to increasing its sales volumes. The objective of this study is to analyse the relationship, if any, between insurance sales in Malta and advertising expenditures. It also seeks to examine the reasons as to why some insurance companies fail to engage in advertising activities. This research also observes the most frequently used advertising media by these insurance companies, whilst examining if the success of advertising is influenced by such choices of media. So as to carry out this research, an empirical investigation is executed, by distributing a survey to 53 insurance companies trading in Malta. Such questionnaires were addressed to employees within these companies that work in the following areas; marketing and advertising, sales and in the accounts/ financial departments. Both descriptive and statistical analysis were employed so as to understand the collected research data. From these surveys it was found that an insurance company’s failure to advertise is not necessarily the result of lack of good advertising opportunities, but rather due to its high costs. Additionally, the most popular types of media used by these local companies are television and radio, inferring that good choices of media are crucial to the success of advertising. With regards to the impact of advertising on the sales volumes of these insurance companies, in the statistical element, their relationship was not clear. However, from the survey responses, participants perceive an increase in the sales volume as the most positive impact recorded on their company, after engaging in advertising and sales promotion. Thus, this indicates a positive relationship between local insurance sales and advertising expenditure. The implication of such research is to make proper use of advertising, as excessive use may hinder its success.